ELI5: Explain Like I'm 5

Capacity utilization

Capacity utilization is about how much of a company's resources are being used to make things. It helps businesses measure how productive they are. For example, a company that makes cars might use capacity utilization to measure how many cars they are making in a day. If the number of cars they are making is less than what they are capable of making, then their capacity utilization is low. If they are making more than they can, it's at a higher level. Companies like to have a high capacity utilization rate because it means they are able to make more products and make more money.